The IRA is poised to withdraw proposals on how it will destroy weapons and to pull its go-between out of talks with General de Chastelain's decommissioning body, in what would be a huge setback to the deadlocked Northern Ireland peace process.

Republicans are furious at the rejection by Ulster Unionist leader David Trimble of their latest offer on arms, and at the brief suspension of the power-sharing Stormont government, which they see as breaking the terms of the Good Friday agreement that set the framework for government and peace in the north.

The Provisionals' seven-strong ruling army council has yet to make a final decision on its next move. Republican sources told the Guardian last week they believed the IRA was on the brink of starting to disarm but the paramilitaries' fury at the latest political developments has drastically altered the outlook.

A fresh IRA statement, cancelling out its earlier confidential agreement with General de Chastelain on a method of putting its guns and explosives permanently out of action, could now be released within the next week.

This could push the clock back to before May last year, when the IRA announced for the first time its intention to put its weapons "completely and verifiably beyond use" and said it would allow agreed third parties to inspect several of its secret arms dumps as a confidence-building measure.

It would deal a massive blow to the government, which has given all sides another six weeks' breathing space to try to reach agreement on arms, policing and demilitarisation.

Unionists' mistrust of the Provisionals would also heighten, leading them to claim the original offer was not genuine in the first place, and making the prospects of overcoming the impasse all the more difficult.

Sinn Fein was incensed when the Northern Ireland secretary, John Reid, put the power-sharing Stormont government on ice for 24 hours over the weekend, invoking a legal loophole to buy six weeks' extra negotiating time.

He said this was the best available option after Mr Trimble insisted his party required a physical start to IRA disarmament before he could return as first minister, the post he quit in July in protest at lack of progress on decommissioning.

Mr Reid claimed the alternatives, a prolonged suspension or fresh elections which would further polarise the parties, would have been even more damaging. "I believe we are tantalisingly close," he said. "This peace process, in its final implementation, is within our grasp."

He appealed to the IRA not to walk away from its propos als "not least because I don't think it would be understood".

But there is a precedent: the Provisionals broke off contact with General de Chastelain four days after the then Northern Ireland secretary Peter Mandelson suspended the Northern Ireland assembly in February 2000, when Mr Trimble first threatened to quit as first minister over the weapons issue.

A Sinn Fein spokesman said such a move was a matter for the IRA leadership, but Sinn Fein's chief negotiator, Martin McGuinness, warned yesterday it was a possibility.

"The unionist rejection of General de Chastelain's determination and the suspension of the institutions may have caused a serious situation in that regard," he told BBC1's Breakfast with Frost programme.

"It may have jeopardised the very important development of earlier this week. Now we see a situation where there are questions being raised as to whether or not that initiative may be jeopardised."

The Sinn Fein president, Gerry Adams, accused the government of dealing in "Humpty Dumpty" politics. If the British say a deal is within reach, "does that mean they are going to pull troops out of South Armagh, Tyrone, West Belfast and North Belfast"?

He added: "I hear also the patronising tone that the institutions have been stood down for only one day and now it's OK again. Well it's not OK again."

Republicans are also worried that pressure from the hardline wing of the Ulster Unionist party will raise the bar on decommissioning demands, particularly after Lagan Valley MP Jeffrey Donaldson called for a unionist representative to witness any destruction of weapons.

The government is set to publish its implementation plan on police reform this week, which will address some areas of concern to nationalists. The hope seems to be this will soften the ground for progress on paramilitary arms.

But Sinn Fein has always insisted the establishment of an impartial, independent police service is a separate issue from decommissioning.